Judiciary HomepageChairman Moorhead and members of the Courts and Intellectual Property Subcommittee, my name is Kenneith F. Addison, Jr., Pte. I live at 1600 North 70th West Place in Tulsa Oklahoma, 74127. I am President of the 500 member Oklahoma Inventor's Congress. Our organization is also affiliated with the Alliance for American Innovation which has been a leader in the battle to restore our historic patent term by the passage of H.R. 359. More than 165 members of congress have co-sponsored this legislation yet we have not had the opportunity to have a hearing. Yet, these two bills just introduced are having a hearing. I am extremely concerned that these two bills (H.R. 1732 and H.R. 1733) are going to seriously weaken the historic American patent system.
For over 200 years, since the American patent system was created in 1790, patent applications have been kept in secrecy until they issued as patents. Historically, a patent disclosure is not published until the patent issues because an inventor permits public disclosure of his trade secrets in return for the grant of a patent. H.R. 1733 violates this basic premise by seeking to publish the patent application after 18 months without a patent being granted. This is particularly contradictory because, if a patent is about to be issued, H.R. 1733 results in double publication (publication of the application and the patent), but if a patent is not about to be issued, the inventor is loosing his trade secrets without getting a patent.
Seasoned businessmen know that a one-sided agreement will backfire. Talking advantage of America's inventors will not result in any benefits to America, although it will certainly result in benefits to foreign companies. Violating a 200-year old premise and disregarding the wisdom of Thomas Jefferson will harm America's inventors and will harm America's competitiveness. Also, publishing an inventor's trade secrets without giving the inventor a patent is also against established public policy. It is obvious that such an action will cost jobs, emerging industries and national wealth.
The reasoning behind changing this historical law appears to be early dissemination of information. However, H.R. 1733 will have the reverse effect and will have a detrimental effect.
First, H.R. 1733 will discourage inventors from filing patent applications for their most important inventions. The classical decision, whether to keep the invention a trade secret or get patent protection, will now be weighed more heavily in favor of trade secret protection rather than patent protection. The net result of H.R. 1733 will be early publication of many mundane inventions, but with fewer important inventions to publish or to issue.
Second, H.R. 1733 violates the time honored policy of rewarding an inventor for his contributions. Long before the inventor has a patent to enforce, and even long before the inventor knows what patent protection (if any) he will receive, his invention will be disclosed to the world. The inventor's efforts to commercialize his invention will be jeopardized because large companies; with their greater financial, manufacturing, and marketing resources; will preempt the inventor's under-capitalized attempts to get a foothold in the market. The inventor will see competition entering the market before he has a patent to protect his technology.
Third, H.R. 1733 will encourage the Japanese tradition of patent flooding, the filing of many mundane patent applications by competitors to surround and to strangle a cutting- edge technology. In Japan, patent applications are published in 18 months; then cutting edge patent applications are immediately surrounded by a flood of copycat patent applications having minor changes. This flooding preempts the inventor's continuing R & D efforts and forces the inventor to negotiate with his competitors in order to commercialize his own invention. Patent flooding is consistent with the Japanese system, which encourages copying and discourages innovating. However, America's competitiveness requires innovation, not copying. America cannot remain competitive playing by the Japanese rules.
Fourth, H.R. 1733 will disclose American technology to foreign companies more quickly so that foreign companies will get a head start and America will loose another competitive edge. For example, it is well-recognized that the American competitive edge is technology and the Japanese competitive edge is production. Premature disclosure of technology will reduce the competitive edge of American innovators by giving foreign companies advance disclosure of pending American technologies.
Fifth, H.R. 1733 will more seriously harm cutting-edge American industries. Patents on cutting edge technologies (such as biotechnology) take longer to issue because they involve more advanced technology, they seek broader claims coverage, and they are more likely to be appealed. The GATT legislation provided for 5-year extensions of the patent term and H.R. 1733 seeks to increase the extensions of the patent term to 10 years.
Inconsistently, H.R. 1733 seeks to publish after 18 months. Consider a biotechnology patent issued after 13-years (a 3-year base period and a 10 year extension as provided for in H.R. 1733), the technology will be old and well established in the marketplace, having been published 11.5 years earlier by the time the patent issues. The competitors will be producing a second generation of the invention by the time the inventor gets a patent on the first generation of his invention.
In conclusion, H.R. 1733 will severely weaken the patent system by the publication of patent applications 18 months after filing. For over 200 years, American patents have been published when issued, not while still pending. However, the Patent Office acquiesced to the Japanese government's demands to publish an American inventor's trade secrets whether or not a patent has been issued and whether or not a patent will ever be issued. This violates the Constitutional mandate regarding inventions by discouraging the filing of patents. H.R. 1733 will prematurely disclose an invention to foreign competitors so that they can compete with the inventor before he has a patent to protect his invention.
H.R. 1733 seeks to change historical American patent laws. It goes against public policy, it will discourage innovation, and it will harm America's competitiveness. Thomas Jefferson was right, H.R. 1733 is wrong.
Now, let me take this time to discuss H.R. 1732. H.R. 1732 makes the issuance of a patent into a license to destroy a small entity patent owner. H.R. 1732 is a hunting license for large companies to bring their full legal resources to bear to attack and destroy any individual inventor or small business that gets an important patent issued. H.R. 1732 takes the controversy out of the Federal courts where it belongs, H.R. 1732 deprives the patent owner of important rights and protections that the patent owner has in the Federal courts, H.R. 1732 protects the large company from the legal recourse of the patent owner, and H.R. 1732 places the small entity patent owner at the mercy of predatory large companies. H.R. 1732 implements third party reexaminations in a manner that will severely reduce the number of small entities seeking patents in America. Owning a patent would be too dangerous for a small entity.
Equity for the little guy is a basic premise of the Federal court system. A large company cannot file a law suit against a small entity patent owner just because the small entity owns a patent. A large company can only file a law suit (a Declaratory Judgment law suit) if the patent owner tries to enforce a patent against the large company. In this way, the Federal courts prevent a large company from attacking a small entity just because the small entity owns a patent (or owns a house or a car or any other property).
Reexamination circumvents the Federal court system and its historical concern for equitable treatment for the small entity. Reexamination gives a large company the right to file a legal action in the Patent Office to attempt to destroy an important patent and even to destroy a small entity patent owner just because a patent was issued. Reexamination does not need the patent owner to attempt to enforce his patent. The issuance of a patent is cause enough for a massive attack under reexamination. The problem is compounded under reexamination because the patent owner is stripped of important legal rights that he has in the Federal court system.
Reexamination is a "Star Chamber" action. The party in interest (the large company paying for the reexamination) does not have to identify itself. The large company typically has an attorney act as the "Requester" for the reexamination, the large company remaining totally anonymous. This circumvents the equity implemented in the Federal court system where the "real party in interest" has to identify himself Certainly, a patent owner has a right to be confronted by the "real party in interest".
In H.R. 1732, the "Requester" is estopped and prohibited from certain future actions (35 USC 306(c) and 35 USC 308 as amended by H.R. 1732). This is absurd. The true "Requester" does not have to be identified and typically is not identified. Only an attorney firm is estopped and prohibited. The "real party in interest" merely hires another law firm as the new "Requester" and hence evades the estoppel and the prohibition.
Alternately, in foreign countries, different companies file multiple reexaminations in sequence to use up the balance of the patent term.
Presently, in reexamination a "Requester" prepares a legal brief, often an overwhelming large legal document, and then must step aside while a patent examiner prosecutes the reexamination against the patent owner. However, H.R. 1732 permits a large company to bring its full legal resources to bear against a patent owner without the patent owner having made any move to enforce his patent. The issuance of a patent to a small entity by itself will be the hunting license to attack and destroy the small entity under H.R. 1732.
35 USC 282 establishes a "presumption of validity" for a patent. In a Federal court action, this is a very important asset. However, this "presumption of validity" does not apply in reexamination. Effectively, during reexamination an issued patent goes back into prosecution in the Patent Office, starting all over again as if it had just been filed, except that (a) many years of the patent term have already expired, (b) the patent term continues to run during reexamination and (c) the patent owner is now up against a team of attorneys hired by an infringer or other adversary. What is the value of getting a patent issued when an infringer can return the patent owner to "square one", devastate the patent owner's finances, and consume most of the patent term with impunity. In a Federal court action, an infringer who looses is liable for an injunction and damages. In a reexamination under H.R. 1732, an infringer who loses the reexamination actually wins because he has gained 5 to 8 years of infringement with impunity, he has no liability for an injunction or damages, and he has used up 5 to 8 years more of the patent term.
Presently, the Patent Office prosecutes a reexamination without the "help" of the "Requester". With H.R. 1732, a large company will be able to prosecute and appeal its own reexamination against the inventor. This will turn reexamination proceedings into a form of litigation with a team of high-paid litigation lawyers overwhelming a small entity patent owner. It is common for a patent litigation to cost millions of dollars, sometimes exceeding $10 million. Also, H.R. 1732 will turn the Patent Office into a litigation arena, overwhelming the already strained patent examining corps. A patent examiner is not trained to be a Judge for two teams of attorneys filing reexamination briefs. It is inequitable to place a patent owner at the mercy of an un-named infringer with only a patent examiner as a judge after first depriving the patent owner of his statutory presumption of validity and his right to seek an injunction and damages. The Patent Office is no place for patent litigation.
Presently, reexamination is limited to prior art issues. However, with H.R. 1732, reexamination is being expanded to cover 35 USC 112 issues (written description, enablement, claim drafting, and other issues). This will significantly increase the burden of a reexamination proceeding. For example, it will involve extensive testimony of expert witnesses and it will involve arguments ad nauseam relation to nuances of claim drafting and disclosure drafting.
Presently, in reexamination, a decision by the Patent Office in favor of the patent owner is not subject to challenge by the "Requester". However, with H.R. 1732, the "Requester" can appeal to the Board of Appeals and to the Court of Appeals when the patent examiner decides that the patent is patentable. Such appeals take years and add enormous costs to the burden of a small entity patent owner after the patent examiner has found for a second time (the first time was when the patent originally issued) that the invention is patentable. Third party appeals are clearly inequitable.
Reexamination under H.R. 1732 significantly shortens the effective term of a patent. The time that a patent is under reexamination (realistically, 5 to 8 years through prosecution and appeal) is effectively subtracted from the patent term. This is because, when a patent is under reexamination, it cannot reasonably be enforced. Licensing activities and District Court actions will typically be put on hold until the reexamination is concluded. Technology obsolescence can be expected to occur by the time that reexamination is concluded even if the patent has not expired. Also, it is common in foreign countries to have a sequence of oppositions, one after another, using up the patent term for a foreign patent. Two or three reexaminations in sequence would cause a patent to expire without ever being enforceable. This is how the patent system works in Japan, which produces few fundamental innovations. Should the American patent system be the same?
Presently, for a Patent Office fee of $2,000; a "Requester" can institute a reexamination that can cost the patent owner over $100,000 and use up many years of his patent term. Under H.R. 1732, for a Patent Office fee of $2,000; a "Requester" will be able to institute a reexamination that could cost the patent owner over $ 1,000,000. This would be devastating to an individual inventor or a small company. H.R. 1732 is a hunting license for large companies to destroy the innovative small entities that are the basis of America's competitiveness and job creation.